Expected Return Analysis

question 29

Essay

Expected Return Analysis. Alex P. Keaton has just accepted a job as a broker at a major NYSE member firm, and has been asked to develop a list of customers by telephoning medical doctors and other professionals located in the metropolitan area. On average, Keaton expects 1% of those called to purchase $15,000 each in mutual fund investments, and 3% to purchase $10,000 each in stocks and bonds. Keaton earns a 2% net commission on mutual funds and 1% on stocks and bonds.
A. Calculate Keaton's expected net commissions if he calls an average of twenty-five persons per day.

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Definitions:

Bank

A financial institution licensed to receive deposits, offer loans, and provide various financial services to individuals and businesses.

Novation

The act of replacing an old contract with a new one, substituting a new party into an existing agreement.

Mortgage

A legal agreement by which a bank or creditor lends money at interest in exchange for taking title of the debtor's property, with a clause for voiding the agreement upon repayment.

Discharged

In legal terms, released or freed from an obligation, duty, or liability.